Technology Moves Center Stage

Three conferences I participated in this week brought into sharp focus the growing divide between those who believe that the government should run our health care system and those who are investing a huge amount of energy and resources into creating a vibrant, consumer-centered health care economy.

I was the requisite conservative speaker at a workshop on ?Guaranteed Access to Quality Health Care for All? at the National Breast Cancer Coalition conference in Washington on Monday.

About 500 people, mostly women who have or have had breast cancer, attended the overall conference, and our workshop room was jammed past capacity. These women were successful in 1993 in getting breast cancer treatment covered in a special category under Medicaid, and it’s clear that the goal for the vast majority of them is government coverage for all health care.

They have lost jobs and had their insurance cancelled when they got sick, faced impossibly high premium hikes, fought bureaucracies to get the treatment they felt they needed, and had huge out-of-pocket co-payments even when they had insurance.

They are fed up with the private health insurance system.

I argued that if they owned their own health insurance, they would have a contract that would require their insurer to provide coverage for their treatment and that a consumer-centered system with private competition would provide them more options of more affordable coverage. And it would foster the continued innovation that could actually produce a cure for breast cancer.

I got a lot of push back during the Q&A, but many of them came up to me afterwards wanting to know more and asking to get our newsletter. The message of consumer-power resonates with them, but they just need to see that the best environment to exercise that power is through the free market.

Then I flew to Stamford, Connecticut, on Tuesday for an IBM-sponsored summit on ?Patient Centric Healthcare.?

IBM is investing big-time in helping hospitals and other major health sector businesses to develop sophisticated new hardware, software, and management systems to reduce ?mis-informed care? and provide higher-value care.

?Investment in information technology is as important to our business as it is to Wall Street, but the health sector is starving for IT solutions,? said Paul Sikora, VP of IT at the University of Pittsburgh Medical Center. He proceeded to explain how the center sees information technology as a vehicle to become a world-class medical facility.

Dr. Martin Sepulveda, an IBM VP, captured the new spirit when he said: ?We have moved from physician-centered care early in the last century, to the payer-centered system we are still in today, where the processor of claims becomes the driver of the system through networks, payment schedules, and codes, with little or no transparency to the patient.

?But the patient-centric era is here,? he said, ?driven at least partly by the complexity of care. Doctors have to see the patient’s history to make good clinical decisions and that means personal, portable individual health records. The next frontier for health care is in a patient-centric network.?

And even here, with an audience of consultants and other people in the health care business, there was push-back. They said: ?Patients don’t want to be in charge. They like their $10 office co-pays.? Or ?Health care is just too complicated. Patients can’t possibly make their own decisions.? Or ?There are only a few companies, like IBM, with a sophisticated enough workforce to make patient-centered health care work.?

(This reminds me of the estimates 50 years ago that there would only be a handful of potential clients sophisticated and rich enough to buy mainframe computers – computers much less powerful than the one you are using now to read this newsletter.)

Throughout the conference, there was heated discussion about how electronic medical records can be assembled and who should own the record. (Answers: 1. They will first be populated by claims data, and 2. The owner must be the patient.)

Take away: The new technologies on the drawing board and the opportunities to bring the health sector into the Information Age are dazzling.

Then, I flew to Nashville yesterday to speak at the Tennessee Healthcare Information Technology Summit, held at the spectacular Opryland Hotel.

These people focus on the nuts-and-bolts of how to make the new era of a consumer-centered health care system work, with dozens of vendors in the exhibit area offering their pieces of the puzzle, from Microsoft to Oracle, to many Tennessee-based health technology companies.

The financial services sector is also exerting its muscle, seeing that the primary profit business for health plans is in claims processing. They are saying: We can do that, in fact, we already are doing that with banking and credit card transactions. And with $2 trillion in annual spending on health care, they see a big opportunity to move in and do the job faster, better, cheaper.

And Quicken, which has revolutionized accounts management for millions of households and businesses, also is developing a new software product to allow people to download their medical claims and eventually all of their medical information.

I do not know how the business sector and politicians are going to sort this out. But I think this is the best and most interesting issue we could possibly be involved in. Thank you for joining us on this thrilling ride.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

Consumer decision making in the individual health insurance market

2006 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds

Making it easier for the uninsured to find and apply for health insurance could be as effective as new tax subsidies in helping to expand coverage, according to a new Health Affairs study of consumer decision making in California’s individual health insurance market. The study also said that ?tax subsidies in the individual market would not lead to an unraveling of the group market as some fear.? The study confirms research by Pauly et al that ?there is considerable risk pooling in the individual market and that high risks are not charged premiums that fully reflect their higher risk.? The authors conclude: ?Although the solution to the problem of information barriers is not new, some believe that online tools that make information easily accessible, deliver tailored information, and reduce the administrative complexity in obtaining health insurance will spur growth in the individual health insurance market?equivalent to a 20% subsidy.? Full text: content.healthaffairs.org

The 2006 Medicare Trustees Report finds that Medicare’s Hospital Insurance (HI) trust fund will run out of money in 2018, two years earlier than the Trustees forecast last year. Medicare Part B premiums are expected to increase by about 11% in 2007 to $98.20 a month. The trustees report also found that cost projections for Medicare’s prescription drug benefit ?are significantly lower than in the 2005 Report, [reflecting] slower-than-expected drug spending growth in 2004 and 2005, greater savings from manufacturer rebates and other discounts, utilization management projected to be achieved by Part D plans in the first few years, and preliminary data on actual Part D enrollment for 2006.? (Of note: CMS director Mark McClellan also announced this week that he expects seniors to have the option of selecting Medical Savings Accounts through Medicare next year.) Full text: www.cms.hhs.gov

In an analysis of the trustees report, David C. John and Robert E. Moffit, Ph.D. of The Heritage Foundation find that ?[t]he only responsible policy option for Congress and the Administration is to embark quickly on serious reform of the Medicare program and changing it from an open-ended entitlement to a defined-contribution program, adjusting contributions for age, health costs and income.? Joe Antos of the American Enterprise Institute agrees. ?We need to replace Medicare’s culture of entitlement, which distorts the decisions of patients and providers alike, with a culture of individual responsibility and efficient delivery of care.? Full text of Heritage paper: www.heritage.orgFull text of AEI paper: www.aei.org

MITT’S NON-MIRACLE Source: The Wall Street Journal, 05/02/06

It has only taken two weeks to turn the Massachusetts health care plan into an ?employer mandate and a vehicle for increasing the role of government,? according to a Wall Street Journal editorial. The Massachusetts legislature overrode several of Governor Romney’s vetoes, and restored the $295-per-employee penalty on employers who do not comply. ?That $295 may not sound like much, but it’s sure to grow over time,? writes the Journal. ?And in any case the real employer penalty in the bill is a draconian provision that puts employers on the hook for the major medical bills of employees they don’t insure.? Governor Romney has said that the cost of uncompensated care for the uninsured significantly increases the cost for private health insurance. But the Journal points to estimates that free care for the uninsured accounts for only 2.8% of health care spending nationally. ?The real cost drivers are two regulations — guaranteed issue and community rating — that unreasonably restrict the freedom of insurers to offer and price coverage, and which his new law explicitly preserves in his state,? writes the Journal.Full text: online.wsj.com

In a commentary in the Journal today, Betsy McCaughey offers a section-by-section description of some of the more onerous provisions in the fine print of the Massachusetts plan. Full text: online.wsj.com

Two new polls demonstrate consumers’ growing demand for pricing transparency in the health care system. A survey for the Council for Affordable Health Insurance, conducted by Zogby International, found that 84% of survey respondents agreed ?that hospitals, doctors, and pharmacies should publish their prices for all goods and services,? and 79% said that if they had that information, they ?would be likely to shop for the best price.?

Another Zogby poll commissioned by the HSA Coalition found that large margins of those polled support boosting the allowed maximum contribution amount to Health Savings Accounts, want to be able to pay insurance premiums from their HSAs, and believe health insurance should be portable from job to job. It also found that 88% of likely U.S. voters agree ?the price paid for Medicare services at hospitals and doctors offices [should be] published on the Internet.? [Plans are underway by the administration to do just that, as President Bush announced this week in a speech to the American Hospital Association.] CAHI/Zogby poll: www.cahi.orgHSA Coalition/Zogby poll: www.zogby.comPresident Bush’s speech to the AHA: www.whitehouse.gov

Bob Moffit and Nina Owcharenko of The Heritage Foundation suggest several substantial changes to federal health policy that the Senate should address during its annual ?Health Week.? Their recommendations include: 1) establishing health care tax credits for individuals, 2) allowing individuals to purchase health insurance from states other than their own, 3) separating health savings accounts from the high deductible health plan requirement, 4) allowing employers to contribute directly to an employee’s individual health care plan, and 5) enacting a Federalism initiative to give states more flexibility to experiment with policy solutions. ?If Congress continues to refrain from enacting meaningful health care legislation, Americans should turn to their governors and state legislatures for help in redesigning health insurance markets to make health insurance more affordable and expand the control of individuals and families over their health care dollars,? conclude the authors. Full text: www.heritage.org

The Cato Institute has published a new book by economist Arnold Kling titled Crisis of Abundance: Rethinking How We Pay for Health Care. Kling describes an ?approach for increased consumer responsibility, with fewer expenses paid for by third parties.? He writes, ?The idea of matching the health care funding system to needs is very simple. The very poor and the very sick need help paying for health care. The rest of us do not.? The book can be purchased at: www.catostore.org

Kaiser Conversations on Health with Eli Lily and Company CEO Sidney TaurelKaiser Family Foundation EventWednesday, May 10, 2006, 12:00 – 1:00 p.m. E.T.Barbara Jordan Conference CenterWashington, DCThis event is open to the public; however, space is limited and registration is required. If you wish to attend, please RSVP To Tiffany Ford at tford@kff.org or 202-347-5270.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at http://www.galen.org/.

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